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G7 Talks on Ukraine; Another S&P Record; China Cyber-Espionage Claims; Tiananmen Remembrances Blocked in China; Pryte Joins Facebook; Heathrow Terminal 2 Reopens; Pre-Clearing Customs

Aired June 4, 2014 - 16:00   ET



MAGGIE LAKE, HOST: The S&P 500 has closed at another fresh record. It's Wednesday the 4th of June.

The EU's president tells CNN the G7 will not accept Russian aggression.

China's media condemns Google, Apple, and Facebook and says they are US pawns that must be punished.

And Terminal 2 is open for business, so why is it so empty?

I'm Maggie Lake. This is QUEST MEANS BUSINESS.

Good evening. Tonight, the president of the European Commission says the West does not accept Vladimir Putin's actions. Jose Manuel Barroso says a firm, united front must be maintained against Russia.

The message comes as G7 leaders arrived in Brussels for talks that will no longer include the Russian president. Russia was actually supposed to host this crucial meeting of the G8. It was to have been held in Sochi. Plans changed after Russia annexed Crimea.

It has now been excluded from the talks altogether. The urgent topic at hand: the crisis in Ukraine and how to support Kiev while pressuring Moscow to deescalate tensions. I spoke earlier to Jose Manuel Barroso and asked him how the G7 plans to influence Russia.


JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I think the very fact that we are meeting here in G7, in Brussels and not the G8 in Sochi in Russia, it's itself a very important political sanction.

It is showing clearly that we don't accept the Russia of Mr. Putin at the table of like-minded democracies, that we believe that it's not legitimate that place, because with the behavior of Russia in the issue of Ukraine, Russia isolated itself from the rest of the countries -- members of the G8. So, it's already a very important signal.

At the same time, we are now keeping a united, firm position at the same time that we are supporting Ukraine. I think there are basically two lines: one is to support Ukraine, to help Ukraine stabilize economically and politically, and on the other side, show with our firmness that we will not accept this kind of behavior from Russia.

LAKE: And you talk about a united front, although some have said that there is at least the perception that Europe is not willing to really carry out serious economic sanctions. They need Russia's energy too much and access to Russian markets. What would you say to that?

BARROSO: First of all, we believe that those sanctions are already producing some results. Russia should be growing now as an emerging economy, should have a substantive growth, and according to the forecasts, it will be in recession this year because there is lack of confidence in Russia.

Also because there are outflows of capital from outflow. There is also the rebel that has been evaluated. So, they are already feeling this pressure.

And I think we are keeping in a clear and determined manner our threat of further sanctions. At the same time, we also believe that it is important to keep room for dialogue. We prefer deescalation to escalation. We prefer dialogue to confrontation.

So, yes, it's a firm position because all the governments of Europe agrees that if necessary, they are read to go further. But at the same time, they believe that is important to bring Russia for negotiation and to have another kind of position, a more constructive position.

LAKE: And as you sit down with your G7 partners to work on this very important issue, it comes against the backdrop once again of investigations of allegations of perhaps the US government spying on the German chancellor. Has this undermined the -- Europe's relationship with the US and its ability to work together on these other very important issues?

BARROSO: This, of course, is a very serious issue, and I have to tell you that it had a very serious impact, not only on Germany, where there is very stronger, understandable feelings and emotions about this, but also across Europe.

This is not to go -- to be -- this is not on the agenda of this G7, but I hope that bilaterally we can restore the level of confidence that is so important in this transatlantic partnership.


LAKE: White House correspondent Michelle Kosinski is live in Brussels for us this evening. And Michelle, Vladimir Putin not at the table, but the issue of Russia and Ukraine absolutely dominating this meeting.

MICHELLE KOSINKSI, CNN WHITE HOUSE CORRESPONDENT: Yes, and American officials spelled that out. It is sort of strange how no, his presence is not here, he's essentially been kicked out of these discussions at this very important summit, but his presence absolutely is felt.

Even some of the topics that would have come up anyway that are important moving forward for this bloc of nations -- collective defense in NATO, the economy, energy security -- well, they've all sort of been morphed into this immediate problem and immediate need because of Russia's behavior in Ukraine.

Energy security is probably the biggest one right now, wanting Europe as a whole to be less dependent on Russia fuel, especially Ukraine, so that it can't be used by Russia as a sort of punishment, as Russia has attempted to do in trying to up the payments from Ukraine or withhold it. For that kind of activity to continue, there needs to be some changes.

Also, collective defense in NATO. The US has taken steps already to try to fund training more, to step up controls, to try to equip Ukraine more, at least at this point, with non-lethal aid. So, there's very much movement and discussion because of what has happened just in the past few months. It's really shaped discussions on a global scale, Maggie.

LAKE: Michelle, as we -- as came up in the discussion, there -- my discussion with the EU president, they want to talk about presenting a united front. This comes at a slightly awkward, uneasy time, though, for this US president in his relations with his European allies. Not only do we have this spying -- issue of spying on the German chancellor, still looming, an investigation going on.

You also have US financial authorities considering a $10 billion fine against a French bank. That has gone right up to the top of politics in France. Has the administration made any sort of comment about what they believe the state of the relationship is with their European allies? How can they present a united front when things seem to be on shaky ground itself?

KOSINSKI: Absolutely. And that's the question that's kind of like the front that you portray versus all of these issues and problems going on in the background. I'm glad you brought that up. Just today there were these reports that France is about to sell a warship to Russia and is going to train them on the warship.

So, even with sanctions that are supposed to be collective, there's a lot of dissent within there, and a lot of question marks as to how much participation there's really going to be, and how effective they even are.

In Poland, the president of the United States said today that nations must stand against aggression, of course meaning Russia at this point in time. But how that really is going to play out? We know that sanctions are going to be discussed during the G7. They're going to real talk about what the next benchmark is.

Because for sectoral sanctions that would affect swathes of the Russian economy to go into effect, the benchmark was supposed to be whether Russia would interfere with a free election. Well, the election has already happened, but that doesn't mean they're through talking about sanctions.

And President Obama also spoke to President-elect Poroshenko of Ukraine today, and here's some what of Poroshenko had to say moving forward.


PETRO POROSHENKO, PRESIDENT-ELECT OF UKRAINE: From the very beginning, from the first day of inauguration, we are ready to present a plan for peaceful resolution to the situation on the east.

And within the next several days will be very important, crucial, for the Ukrainian history and for Ukrainian perspective.


KOSINSKI: And for other Western countries, it seems like the best that they can portray right now is to say let's stand together in supporting democracy in Ukraine and making sure that that country is strong, including militarily in the future, given the situation on ground that in some ways continues to deteriorate, Maggie.

LAKE: United front in public and probably some pretty tough negotiations and discussions happening behind the scenes. Michelle Kosinski for us tonight, thank you so much.

Well, US stocks ended the day higher, and the S&P 500 is back at a record close. Alison Kosik is at the New York Stock Exchange, and Alison, you and I talked at the very beginning of the session today, and it looked like it certainly wasn't going to go that way. We had some selling early.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. There were red arrows at the beginning of the session. And then, we did see stocks go ahead and bounce back into the positive column. As you said, S&P 500 touching yet another record.

One thing we didn't see today, though, Maggie, we didn't see huge moves. We got a reading on private sector hiring from ADP showing employers added 179,000 positions last month. That coming in weaker than expected. It of course coming ahead of the key government jobs report on Friday.

But here's what got stocks into that positive column. We got a reading from the service sector showing expansion in May, that business activity and new orders jumped. This is good news because the services sector accounts for about 90 percent of US jobs.

And what this report essentially shows is that companies are adding workers, they're adding inventory. This as demand gets stronger, as we sort of continue to thaw out from that -- from the very brutal temperatures we had over the winter. Maggie?

LAKE: All right, Alison, thank you so much. As the world marks the 25 year anniversary of the Tiananmen Square massacre, China launches an offensive against US tech companies. Why the government says Google and Apple pose a threat, next.


LAKE: US tech companies deserve to be punished. That's the message from China's state media. "The People's Daily" says Washington uses American tech companies like Apple, Google, and Facebook to spy on Chinese web users, and it promised retribution from Beijing.

"We will also severely punish the pawns of the villain. The priority is strengthening penalties and punishments, and for anyone who steals our information, even though they are far away, we shall punish them." It's just the latest in a war of words between Beijing and US tech companies.

Now, as we told you on last night's program, China is already restricting access to sites like Google as the rest of the world marks 25 years since the Tiananmen Square massacre. China's Communist Party suppresses discussion of the event and has gone to great lengths to wipe it from public memory. David McKenzie has more.



DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): In 1989, thousands of student activists believed they would change China.


MCKENZIE: And during one euphoric summer in Tiananmen Square, many thought they could.


MCKENZIE: Then, the Communist Party ordered the crackdown.


MCKENZIE: And the soldiers mobilized, crushing the democracy movement. "I was there," says this woman. "It was chaotic. They had guns and shooting. Bang! Bang! Bang! All night it went. There was fighting everywhere."

"There were bullet holes right in these walls," says this witness. It was a night of fear and, for many, of shame. "Everyone thought they should not have opened fire," he says. "Why did they open fire?"

Back then, the party defended its crackdown, but now, those questions are left unanswered, and no one is allowed to speak of the massacre. "So before long, the police tracked us and shut us down."

"We both know why you can't come here right now," he tells me.

MCKENZIE (on camera): The democracy movement started long before June 4th, and this place, Beida University, was where the discussions started and the ideas started forming for the students to protest.

MCKENZIE (voice-over): "Does the day June 4th mean anything to you?" we asked. "What is it? A national holiday?" she says. "No. No, I haven't," she says. Many young people in China have never heard of June 4th. But fresh from graduation, this student says some do talk about the massacre in private. "Because you never know who could be listening," she says.

MCKENZIE (on camera): Have people forgotten history here?

UNIDENTIFIED FEMALE: Ah, no. (inaudible) forgotten history, but I should say, in China, people are really tolerant. People know that this happened and we need to focus on the future.

MCKENZIE (voice-over): In a way, the future looks like this: throngs of tourists streaming every day onto Tiananmen Square. It seems like the blackout of history is almost complete.


MCKENZIE: Because the Party wants to make sure that this never happens again.

David McKenzie, CNN, Beijing.


LAKE: China's government has said the arrests it's made in recent weeks are justified, saying it puts freedom as one of its highest priorities. CNN's coverage of this story has been regularly blacked out in China in the lead-up to this anniversary.

Now, Pryte is joining Facebook. The Finnish start-up specializes in technology that helps mobile users get online without buying expensive data plans. Facebook says the acquisition will help with Mark Zuckerberg's goal of connecting 5 billion people to the internet in a profitable way.

The International Telecommunication Union says fewer than half of the world's households are online. While Europe and the Americas are relatively well-connected, just look at Africa: just 11 percent of the households there are online

Samuel Burke joins me now to talk about this acquisition. Boy, Mark Zuckerberg not afraid to pull out that wallet, Samuel. Why exactly are they after this particular company?

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well, simply put, Maggie, you can't get people to sign up for your service unless they're online. And this is part of a bigger picture for Mark Zuckerberg.

And, his initiative, which he actually announced here on CNN, trying to get more and more people online. Pryte, what it does exactly, it's not publicly released yet, but we know that they've been working on a plan where instead of buying that big mobile data plan, which you and I spend on our cell phones --

LAKE: Expensive.

BURKE: -- each month -- expensive. And who knows if we use all of it, or we go over, you can have bill shock. What this allows people to do is just buy a little bit of data at a time. They built these relationships with telecoms companies to buy a little bit of data at a time for just the most useful apps.

And of course, Facebook and many others would say Facebook is a very useful app that might be one that you buy it for. But this is part of a bigger picture, like I said. They've purchased drones to try and get internet to people. They're working on building these drones and satellites. So, it doubles up as a charity project and you can always --

LAKE: He's trying to crack that all-important consumer that they don't have yet, right?

BURKE: Exactly.

LAKE: It's the Holy Grail for a lot of people, getting those emerging market -- growing aspirational middle class.

BURKE: And getting them online as a charitable project, but maybe using that in the future to become an internet service provider. Could be very smart business.

LAKE: Right, a platform. They're not the the only ones doing this, though. It's sort of a race for these people, because Google has also set its sights on connecting the world. Again, a bit of altruism, and also maybe a bit of business.

BURKE: And they're doing it on many fronts. Google in just the past few weeks, you've seen "The Wall Street Journal" report on Google spending nearly a billion dollars on satellites to try and get internet to people.

But the one that fascinates me the most are the balloons. Google has this project called Loon, and they actually -- what you're seeing right now on your screen, they actually have these balloons that they put up that are higher than normal balloons, but lower than the satellites, and they actually beam internet down to people, 3G, so fast internet, but not the fastest internet.

They tried it in New Zealand and got some farmers in New Zealand internet access through these balloons, Maggie.

LAKE: And we actually had a Google exec in here talking about the stuff they're trying. I think it came out of Google X. Samuel, this isn't something they can realize money from right away. I guess the good news is, this has got to be good for consumers in these areas, because it may mean people have access.

BURKE: On many fronts, it could be good for the consumer. In fact, Google already had Google Fiber here in the United States where they're bringing internet service for very low prices and faster than the traditional internet service providers that we've seen.

So, good for the consumer, bring down prices, get them internet. Good for services, if companies like Spotify want to have their music to people that don't have internet connections, this could help streaming services, Spotify, Netflix. And of course, it could be even good for, well --

LAKE: Dare we say?

BURKE: -- Google and Facebook.


LAKE: I had a feeling.

BURKE: They could be making a lot of money off of this in the long term.

LAKE: But hey, it was win-win-win, I suppose that's the scenario everyone's after, right? Samuel, thank you so much.

Well, Europe's busiest airport unveils its latest makeover. We'll have the report from Heathrow when QUEST MEANS BUSINESS returns.


LAKE: London's Heathrow Airport unveiled its revamped Terminal 2 today after five years of work at a cost of $4 billion. Officially named the Queen's Terminal, it handled just 34 flights today and will slowly grow to service 26 airlines and 20 million passengers each year. The airport's new CEO, John Holland-Kaye, told our Jim Boulden that Heathrow is back.


JOHN HOLLAND-KAYE, CEO, HEATHROW AIRPORT: With Terminal 2 opening, two thirds of all our passengers are going through the world-class Terminal 2 and the world-class Terminal 5, the best airport terminal in the world.

Heathrow has been transformed in the last ten years by private investment. It is now a world-class global gateway. Heathrow's got its mojo back, and this is something that the whole of the UK can be proud of.


LAKE: World-class. Well, we had to find out for ourselves. Jim Boulden took our cameras along for a tour of the new terminal and filed this report from Heathrow.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, so far so good here at Terminal 2 at Heathrow Airport. An uneventful opening of this new terminal, and that's, of course, what Heathrow wanted, remembering what happened in 2008 with the luggage meltdown at the opening of Terminal 5 for British Airways.

It may look quite empty here and that's because there's only 17 flights scheduled to land and 17 flights scheduled to take off today, and that's because only one airline is using the new terminal, that's United Airlines.

Over the coming weeks, more members of Star Alliance will move into this terminal. All 23 are scheduled to be here by the end of October. The idea was to slowly but surely open up this terminal and make sure things work so there's no problems for the customers, for the fliers.

Now, it's a very simplified terminal. You come in, you check in, you go right through. You can easily see your gate. That's exactly what Heathrow was looking for. They're also looking at a very British thing here: they've got a lot of British brands. When you go shopping and when you go eating, they're very keen on making this sort of a British terminal for all these world-class airlines.

And all this cost around $4 billion and took four years to build. Eventually, they plan to tear down Terminal 1 as well and extend Terminal 2 the notion being they'll have two regenerated terminals in Terminal 2 and Terminal 5.

But it still doesn't increase capacity. Heathrow's looking for a third runway. It won't find out for a few years whether that could happen, but until then, this very crowded airport at least has another very nice terminal.

Jim Boulden, CNN, London.


LAKE: A United Airlines flight from Chicago became the first to land at Heathrow's new terminal earlier this morning. Bob Schumacher, United's managing director of sales, greeted passengers as they arrived. Jim asked him what the new terminal means for his airline.


BOB SCHUMACHER, MANAGING DIRECTOR OF SALES, UNITED AIRLINES: Here we are in this fantastic new terminal. By definition today, the newest terminal on the globe. And it's -- what a marvelous facility it is.

I think for our customers who have -- United customers who braved Terminal 1 and Terminal 4 up until this date, split terminal operation, to be here in this, a 21st century modern facility that has taken all the learnings from T5 and other terminals around the world to produce something which is, really, as good as it gets is a delight for us. So -- and operationally, we're just full on. Everything's working well today. Delighted.

BOULDEN: And of course, you mentioned T5, and that's about six years ago when T5 opened and British Airways had the meltdown with the luggage system --


BOULDEN: -- and staff IDs not working. You've had no issues this morning?

SCHUMACHER: None of that today, and we don't expect any of that. I think we're in a totally different era. Lots of learnings were, of course, taken from that.

And just as United is delighted to be the opening carrier, the first carrier to move into this new T2 facility, the Queen's Terminal here at Heathrow, we are then seeing a staggered entry of other Star carriers that commences from the 18th of June with Air Canada and ANA and Air China joining us here.

And that will, then, continue over the summer period, with the exception of August, until we have the whole Star family in here in Terminal 2 by the end of October.

BOULDEN: So, how does moving to a new terminal make you money and save you money?

SCHUMACHER: Well, on the saving side, clearly the consolidation of two terminals into one, a Terminal 4 operation that used to have New York and Houston, and the Terminal 1 operation that had the rest of our flights across the -- of our 17 flights a day across to the US all in one place gives us those efficiencies.

Gives us those staffing efficiencies, equipment efficiencies, and everything else that comes with running a 17-flight-a-day operation from one of the world's busiest international airports. So, on that side, very important on the cost side.

On the revenue side, as you intimate in your question, we're in a situation where we have a level playing field at last. We are up with the best. Our competition has --


SCHUMACHER: -- had and enjoyed over many years, and here we are, now, too. We have a splendid new -- two new lounge facilities, 22,000 square feet of premium lounge facility for our United Global First and Business First customers, the United club. And it's just terrific. And it's got aerial -- airfield views, and it's as good as it gets.

BOULDEN: It's 17 flights in, 17 flights out, new terminal, but there's not a third runway at Heathrow. We shouldn't make people believe somehow it's a new airport. Do you think there will be a third runway here? And are you calling for that?

SCHUMACHER: It's a very difficult question to answer. The government, of course, have got Sir Howard Davies, who's investigating that topic today and will continue to do so and report to government just after the next election in summer of 2015.

We, of course, will be as anxious as the rest of the airline community to see where that recommendation will fall. But until that happens, we are really just here to celebrate what has happened here, which has been, really, the regeneration of London Heathrow and the manifestation of a huge amount of investment, a huge amount of effort.

And now we have two spanking-new terminals at London Heathrow. And we're delighted to be the sole occupant of T2, if only for a couple of weeks.


SCHUMACHER: And then join with the rest of our --


BOULDEN: When your friends come.

SCHUMACHER: -- Star partners. Absolutely.


SCHUMACHER: And we'll have a party with them, too.


LAKE: In Abu Dhabi, Etihad's new security pre-clearance system is so successful, the head of US Homeland Security says he expects to see more of them around the world. Now, here is how we're all used to flying internationally: take off, then land, then through passport control before you can actually exit.

Abu Dhabi's doing it this way, with passport control coming first, so right after landing you can be on your way. Becky Anderson sat down with the US secretary of Homeland Security, Jeh Johnson, and asked why he supports this new pre-clearance method.


JEH JOHNSON, US SECRETARY OF HOMELAND SECURITY: Part of my job in the Department of Homeland Security is promoting and facilitating lawful trade and travel. Pre-clearance is very much in that mode. It's aviation security, without a doubt.

We want to screen passengers before they get on the airplanes bound for the United States, but it also is a way to expedite travel so that when the passenger gets to the United States, they almost virtually bypass the customs process entirely, as if they were coming in on a domestic flight. So, it's good all around. And so, I'm on a mission to promote this in as many airports as possible.

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: Let's talk about the expansion plans in a moment. Security and convenience, two issues there. Talk security first. Many people will say in an era of heightened aviation alert, why would you hand over security to, effectively a foreign body?

JOHNSON: Well, our people are here, and our people here, our customs and border protection people are here at this airport, at this facility. We're also here training the local authorities on screening, on the TSA function. And so, this is very much a partnership.

ANDERSON: Eighty percent of the cost of running this facility is borne by the UAE authorities. In turn, American pilots and members of Congress will say the competitive advantages with Etihad, the local carrier here, are not with US Airways. So, the business investment, quite frankly, is one tilted toward the UAE, isn't it?

JOHNSON: Well, we're very appreciative of our partnership with the UAE here and their willingness to support this project and this operation. We want to go to other airports as well, where there are US carriers.

I've had discussions with other countries, airline CEOs at the conference I just came from recently, and I'd say there's a lot of receptivity to it, because the airlines appreciate the importance of aviation security along with expediting, facilitating travel on their airlines. So, I think this is going to be something that we're going to see a lot more of.


LAKE: The eurozone may be getting bigger very soon. We'll tell you which country could join the currency union after the break.


LAKE: Welcome back, I'm Maggie Lake. These are the top news headlines we are following this hour. Syrian President Bashar al-Assad has won reelection with 88.7 percent of the vote. That's according to the country's national TV station. The country's opposition and many Western nations have dismissed the vote as a farce.

New video released by the Taliban shows the final moments of captivity for U.S. army sergeant Bowe Bergdahl. Army - armed - fighters surround the area as he is transferred to a Black Hawk helicopter. Bergdahl was handed over in exchange for five prisoners held at Guantanamo Bay on Saturday.

G7 leaders have arrived in Brussels Wednesday for a summit that will focus on deescalating the crisis in Ukraine. Speaking to me on "Quest Means Business," European Commission President Jose Manuel Barroso said when it came to Russia, Western leaders were keeping all options on the table.


JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT: I think we are keeping in a clear and determined manner our threat of further sanction. At the same time, we also believe that it is important to keep room for dialogue.


LAKE: Germany's federal prosecutor is investigating whether the U.S. National Security Agency tapped Chancellor Angela Merkel's cell phone. The prosecutor says there's "sufficient factual evidence to show members of the U.S. Intelligence Services spied on Ms. Merkel's phone.

The Eurozone may be about to get a new member to join the club. Lithuania has received initial approval to join the Eurozone. The country fits all the economic and legal criteria from European Commission. If European governments agree, Lithuania will become the 19th member of the Currency Union. Seven other countries, however, do not fit all the criteria. Bulgaria and Czech Republic, Croatia, Hungary, Poland, Romania and Sweden. European Commission President Jose Manuel Barroso says Eurozone expansion is a sign of increasing stability. I asked him about concerns deflation could send Europe into a lost decade.


BARROSO: I think they are underestimating the resilience and the capacity of adapting of the European economy. We have seen impressive progress these last years, certainly with very important short-term costs in terms of economic and social consequences. But the reality is that confidence came back that now the Eurozone is, as the president of the European Central Bank just said, an haven of stability. And so I want to make this point - I'm fully - I'm fully confident - and I've been working on these issues during the last five years in this crisis - that Europeans will take the important decisions that are needed, that they will keep reforms for competitiveness, that they will now be more strict than they were in the past regarding fiscal responsibility and that they will, of course, work together to avoid any kind of problems for the future economy. Still there is a lot to do, it's true, but I remember last time we met in the G8 meetings in Northern Ireland or in Camp David, all the questions were about the survival of the Euro. Now nobody is putting this question. And I can tell you that just today, the European Commission announced that we will - are - ready from the European Commission to have Lithuania as the 19th member of the Eurozone.

LAKE: And with all due respect, there's a difference between surviving and thriving and some will wonder and question the wisdom of expanding at a time when you have many countries still on the periphery of Europe who are suffering with staggering unemployment numbers. Is the - is the right time to expand?

BARROSO: I think it's important now of course to look at other aspects beyond fiscal policy. Some of these issues are being dealt with by the European Central Bank. I'm sure European Central Bank is analyzing the situation. As you know, the European Central Bank is completely dependent so it's not for me to say what they should or what they are going to do. But certainly, there are some concerns in terms of financing of the economy. I believe it's not acceptable that inside the same monetary union in the Euro we have so many differences in terms of conditions for borrowing. This is making investment namely in some countries of the periphery more difficult. So I'm sure that this issue is going to be dealt with, it's important and also the challenges of deflation are certainly being considered by our monetary authority it is the European Central Bank. Just last week I was in a seminar organizing in Portugal by the European Central Bank and that was, I think, the consensus there - that there is an important issue here and we should be dealing with it.


LAKE: Airlines go to great lengths to design the interior of their planes. One company has found success using 3D virtual reality. We'll take you inside "the cave" when we come back.


LAKE: In the competitive world of airplane design, imagine being able to walk through your own ideas using virtual reality. This week's "Business Traveller" takes us to Germany and behind a pair of high-tech goggles enabling designers to do just that as Richard reports.


RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Historic Hamburg, the global hub of a very modern industry - aviation. And at Lufthansa Technik, part of the German flag carrier, they're housing some seriously next generation design technology. They call this "the cave," where aircraft designs are uploaded and the designer steps in to their creation.

SEVERIN TODT, PROJECT MANAGER, LUFTHANSA TECHNIK: This technology will give the designers a new perspective, a new vision of their designs to go through different materials in the airplane - different cut configurations of seating.

QUEST: The interior cabin is replicated full size, and through the headset, it's in full interactive 3D. Look around those corners and have a look under the seats.

TODT: The master glasses have fancy spheres on there. These are tracked by infrared cameras mounted on top so the system -- when I'm moving within the cave environment -- the scene interacts with me or I am interacted with the scene.

QUEST: This may be an uber-luxurious private jet, however the technology is used across all types of aircraft.

TODT: Half (inaudible) Boeing have virtual environments such as this to lay out their business classes.

QUEST: While the designers may lose themselves in their creation, the business case for all this high-tech trickery is clear - speed.

TODT: This will speed up the design process, it will speed up the engineering phase and we will achieve a much faster completion of airplanes so we all can profit from that.


LAKE: Time now to check the global weather. Jenny Harrison is at the CNN International Weather Center for us. And, Jenny, it - yesterday when I got home the weather changed so quickly - these big, dark clouds moved in. But we were - we got off easy here in New York compared to what some folks went through.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes. You did, Maggie, you're right. But there is that bad weather heading your way - not really into the northeast, nothing like this a very few course that we saw in the last 24 hours. And let me start by showing you - hopefully - there it goes, a bit slow today. Let me show you the radar. So again we've actually got some tornado watches that have just been put out. There's the bulk of the rain - still not as bad as it was this time yesterday, but you can see it's on its way towards you there in New York.

Elsewhere across the U.S., it's actually fairly quiet. But when these storms came through, look at this - this is through Tuesday into the early part of Wednesday morning. So, all this line here is we saw all the activity, and in fact, there have been confirmed 14 tornados reported. There were over 150 wind reports, 150 hail damage reports, and really cutting a swathe through much of the Midwest there. When it comes to the amount of rain that came down, just look at this in Omaha, Nebraska. The monthly average is 106 millimeters, so more than that - 112 in just four hours. And at the same time, 10.8 centimeter hail. Now, if you're wondering how big that is, I'll give you an idea. Baseball size is just how big. This is what it looks like and hopefully I've got some pictures to show you -- some video coming out of this part of the world where there was just the most amazing amount of damage - oh, different one. But, OK, this was when we had the very, very strong storms coming through, so we had some winds that were very, very strong indeed. Doesn't look like we've got the one to show you - the one I wanted to - which was the damage done by hailstones like this.

But even so, that line of storms that came through obviously caused a lot of damage across much of the region. Now, the warnings will remain in place as we continue on into Thursday morning. Again, not really for the severity that we had this time yesterday. There was a high risk, a high probability. There isn't any of that, but even so, hail, strong winds, even a chance of some tornados as well.

When it comes to the airports, it's not been a good day. In fact, the delays have been getting longer. Boston 45, and then San Francisco on the West Coast 40. And we've got a ground stop there up in New Jersey in Teterboro. But, as I say, that could well increase actually as we go through the rest of the afternoon and evening hours, and certainly again as we go into the next day or so. There's some more rain out there, some more thunderstorms, not really the straight line of storms we see that there ought to be (ph) damaged, but, again, we'll have to keep an eye on this weather pattern.

Meanwhile in Europe, rather wet and unsettled across the West, the Southeast. Still quite bit of rain here, more showers as well. And let me just show you this because the cleanup continues across the Southeast of Europe, as much as $4 billion - that's the estimate to clean up all of this. The standing water, the debris, the damage that was actually obviously done. At the same time, further (inaudible) there very, very high temperatures again this Wednesday. Look at that - 30 Celsius in Moscow, 29 in Saint Petersburg. It is going to stay warm in those places, but here's something that you can do. Cool down, find yourself a nice cold fountain and make the most of it, the temperatures staying 11 or 10 degrees above the average for all of these cities over the next few days. Maggie.

LAKE: Looks beautiful. Hydrate, hydrate, hydrate if you're going there. Jenny, thank you so much. Well Brazil's president is fighting back against accusations her country isn't ready to host the World Cup. Dilma Rousseff told reporters that delays are common in such big projects and called them the cost of democracy. On Wednesday fans queued up online and at ticketing centers hoping for a chance to buy some of the 180,000 newly- released tickets to the games. Some Brazilians though say World Cup fever is a headache to be avoided. They're protesting cost overruns and delays. Brazil's president insists those demonstrations will not derail the tournament.


DILMA ROUSSEFF, BRAZILIAN PRESIDENT, VIA TRANSLATOR: We won't allow there to be any kind of turmoil to impede people from going to the World Cup. But the people have access to the World Cup. The demonstrations are completely lawful. What is not lawful, what is not democratic is rioting, destroying private and public property and much less because that is a crime. In this case, destroying property is a crime. But the crime is killing someone.


LAKE: Shasta Darlington is live for us in Sao Paula now. Shasta, first we have the concerns about whether things would be done on time, now it appears that demonstrations also a risk despite the fact the president played them down.

SHASTA DARLINGTON, CNN BRAZIL BUREAU CHIEF: Well, Maggie, I have to say they've actually calmed down a bit. They were so hot just a year ago during the - basically the - practice event leading up to the World Cup known as the Confederations Cup, and that's when we saw hundreds of thousands of people going out onto the street. The problem now is they're smaller but they are rather aggressive and they're intent on disrupting everyday life. So even if it's not - it's not 10,000, it's just a thousand people, for example, we get large groups that are trying to lobby for low- income housing out by the Sao Paulo Stadium. They are blocking the route repeatedly to the Sao Paulo Stadium. So, again, they're smaller but they're intent on making their voices heard. They're using the World Cup as a kind of platform to pressure the government to spend less on big sporting events and more on what they think is important - what Brazil should be spending its money on.

There will, however, be 157,000 police and soldiers on the street during the World Cup. So what the government says is with that many people available, that many security personnel on hand, they'll be able to clean the - clear the - ways to the stadiums. They'll make sure the people can get out of their hotels into the various forms of transportation that they'll need to use and that while there may be some protests, that the games themselves should not be affected, Maggie.

LAKE: And, Shasta, we were talking about the fact that those last- minute tickets went online sounds like a lot but given the fact that it's the World Cup, do we have any sense of whether they're all sold out now? Do we know who is buying them? Did the average person get a chance to get in there and get lucky?

DARLINGTON: Well, Maggie, first I should point out the reason those tickets were still available isn't because there wasn't interest. This, according to FIFA, has been the most over-subscribed World Cup in history. But what they discovered is after this period of time, a lot of the seats for wheelchair-accessible seats for people with special needs had not been bought. So they were able to put them on the market. Now, they went on the market at midnight Brazil time and within an hour, seats for the opening and closing games had sold out, the seats for all games involving the Brazilian national team had sold out and, you know, it looks like as with many of the sales offerings, a lot of average people are getting on and buying those tickets - not without a lot of pain and suffering. There were reports of people sitting on the internet for three or four hours just to get through to the page so that they could pick the game that they wanted to go to, to find out they'd already run out. And even worse, those people who decided they weren't internet savvy enough and wanted to go to the geographical locations around the country in the 12 different cities, people camped out overnight so they could be the first ones in line when the gates opened at 9 at these places to buy the tickets. Well, by then all of the internet purchases had been made and there was very little left, Maggie.

LAKE: As any concert-goer will know, that is the fan of being a price, Shasta, -- seems about right. All right, Shasta Darlington. Thank you so much. Well as the great migration of football fans from around the world begins, we have a glimpse into the future of passenger flight. Airbus says it could be a lot more efficient and possibly even free.


LAKE: Airbus has been testing a model space plane. If it ever goes into production, the plane will take tourists on short journeys above the atmosphere. It's just one of the futuristic ideas Airbus is working on. As we mark 100 years of commercial passenger flight, Isa Soares has been exploring what the next century could bring.


ISA SOARES, REPORTER AT CNN INTERNATIONAL IN TOULOUSE, FRANCE: In the 1970s the future of air travel looked supersonic. Concorde heralded a time of fast and luxurious travel. While it remains the shining the example of the brilliant engineering, the economics just didn't add up. Concorde's speed came at a price. It was a noisy gas-guzzler, the very characteristics that today's plane makers need to cut. Efficient, leaner performance while steering 21st century production.

GREGOR DIRKS, CHIEF INNOVATOR, AIRBUS: Well the energy problem is one of the major drivers of us of course. So we have to do something about it. Reducing fuel burn is one way we do and we've been very successful on the past. Another one is to switch to electric dive is one concept.

SOARES: A vision of the future. A concept plane packed with engineering dreams. Bionic see-through skins giving panoramic views, materials which don't corrode and radical plans for speedier boarding.

Male: Taking a plane could be as simple as taking the subway.

DIRKS: In the future we could think about city center check-in and actually transport little pods to the airports where the passengers are already in and just get with a pod, slide it into the airplane in order to have smooth and seamless experience of flying.

SOARES: Cheaper flights have driven the growth, and with air traffic predicted to rise by more than 4 percent a year, the prospect of free flights is on horizon.

DIRKS: The airlines may not take the money from the passenger directly, it may be from somebody who has an interest of you flying somewhere - medical services for instance. You are confined in a space sitting on a seat which might be quite technical, it might sense body behavior for quite a while and somebody might be willing to pay for this type of thing while you fly.

SOARES: This is the final assembly line of the 8380, the world's biggest passenger aircraft and the flagship of the Airbus fleet. Now, so far 132 of these planes have been delivered to customers around the world. Now, you'd have thought that once production starts, innovation stops. Well, far from it. This is about constant redeveloped making production smoother and improving performance.

DIRKS: The concept plane is a revolutionary concept we've been showing with many things in them and some of them will become reality in a revolutionary plane later in this century. However, we don't want to wait for this, so we take pieces of that vision and try to implement them as early as possible into or operations and into our current fleet. Today we have flying parts today built on 3D printing materials. This is an organic bionic-shape which we couldn't do with traditional manufacturing in a cost-effective way. This is going to be the big revolution in manufacturing. Passengers won't see it much. They got more choice, they got it cheaper and earlier.

SOARES: While the sun may have set on supersonic passenger flight, the speed of the manufacturing revolution is gathering pace, bringing with it the prospect of a greener, smarter and more sustainable future for flight.


LAKE: Now, a question for you. And if it seems obscure, consider this. There are hundreds of thousands of dollars on the line. Why was WM66 washing machine so popular in the days of East Germany. Did it, a) generate electricity, b) boil food, c) work as a vacuum cleaner or d) pick up radio signals from West Germany? We'll give you the answer and explain why the German chancellor is particularly interested, next.



LAKE: Ah, you know that music. If you plan to go on the show Who Wants to be a Millionaire?, don't put Angela Merkel down as one of your phone-a-friend picks. German MP Wolfgang Bosbach needed help right out of the gates when he was stumped by the half a million-euro question. We showed it to you before the break - it was about a famous washing machine in the days of East Germany. Bosbach decided he would call a very high-powered source to find out the answer. Unfortunately, the chancellor had more pressing matters to deal as you might imagine, and let his calls go to voicemail - twice. She sent him a text later on saying, "OK, whatever it was, warm greetings from A.M." Bosbach decided not to guess and settled for one of 125,000 euros which went to charity. And if you're dying to know the answer, it was b) - it was used to boil food. And that's "Quest Means Business." I'm Maggie Lake in New York. I'll see you again tomorrow.